Sunday, November 24, 2013

Washington, D.C., May 1865. Spectators at side of the Capitol, which is hung with mourning crepe and has flag at half-mast.
From LOC.gov

In commemoration of the Kennedy assassination, the New York Times put together a wonderful interactive spread of their coverage following the events of November 22, 1963. It included remembrances of past assassinations (four total) including another time a slain President was replaced by a Johnson, on April 15, 1865.

The first President assassinated in office, Lincoln's murder was part of a conspiracy to depose all the leaders of the US government. There were six conspirators, but only two fulfilled their duties, and only two were killed as a result: Lincoln and Frederick William Seward, the son of the Secretary of State.

The country was devastated by the news. Headlines ran "The Great Calamity!" The New York Tribune reported, "every city was draped in mourning, every hotel and almost every house displaying crepe from the doors and windows."

While Lincoln was killed in a theater, Kennedy's assassin, Lee Harvey Oswald, was captured in one just hours after the act. It took eleven days, however, to capture Lincoln's assassin, John Wilkes Booth, who escaped on horseback.

Relying on word of mouth sitings, primarily from disbanded rebels, Booth was eventually tracked down on April 26, 1865 in Bowling Green, VA.

As the New York Daily Tribune reported, Booth was with his accomplice David C. Herold when they were surrounded in a barn. Ordered to surrender, Booth declared that we would not be taken alive. So, the police decided to burn down the barn.

Once the first match was lit, Herold came out hands raised (he would later be hung for his crimes). Booth remained in the barn "for some time" but when he finally did exit, he was shot in the neck by a police sergeant.

According to the Tribune's recounting, Booth stayed alive for a couple of hours "whispering blasphemies about the government and messages to his mother desiring her to be informed that he died for his country."

Oswald appears to have been similarly motivated. Studying Marxist economic theories, "I could see the impoverishment of the masses in my own mother," Oswald told a United Press International correspondent in an interview. His fervor for Marxist ideology was so strong that he attempted to exchange his US citizenship for a Soviet one, spending two years in Russia, and marrying a Russian woman (the USSR denied his citizenship request).

But if Oswald's actions were designed to help his mother, his plan backfired. Upon learning that her son assassinated Kennedy, she told the Star-Telegram that his defection to the Soviet Union made her life lonely, "and now they will turn their backs on me again."

Only Booth admitted to his crime. After firing the fatal shoot he leaped onto the stage and declared with a dramatic flair "sic semper tyrannis" ("thus, always, to tyrants"). On the afternoon of November 22, despite vast evidence to the contrary, Oswald told reporters "I haven't shot anybody."

Fifty years after Lincoln's death, on April 15, 1915, President Wilson declared a national holiday (the Federal Reserve Bank, however, remained open). To honor the Great Emancipator, flags across the country and the world flew at half-mast. The New York Tribune reprinted a poem written for Lincoln by Vermonter and federal judge Wendell Phillips Stafford. Excerpted below.

Look back upon thy people now! Behold the world thy hands have wrought--The conquest of thy bleeding brow, The harvest of thy sleepless thoughtFrom sea to sea from palm to pineThe day of lord and slave is done.The wind will float no flag but thineThe long divided house is one.

In the more recent crises, Bernanke explained, liquidity started to dry up when housing prices declined, and subprime mortgage defaults rose in 2007. As the underwriting weaknesses of subprime portfolios became known, banks stopped lending to each other, paralyzing credit markets. By 2008, losses from these portfolios were causing banks to fail.

In both crises, a tinder-dry credit environment made them vulnerable to sparks. In 1907, the fire started when F. Augustus Heinze and C.F. Morse tried and failed to corner the stock of the United Copper Company. The investigation into the scam revealed an intricate web of corrupt bankers and brokers. (Heinze was president of Mercantile National Bank, and Morse served on seven New York City bank boards.) When the president of the second largest trust in the country was implicated in the copper cornering con, depositors started a run on Knickerbocker Trust.

Without a central bank, the availability of liquidity depended on the discretion of firms and private individuals, Bernanke explained. The Lehman Brothers moment of 1907 came when New York's financiers, led by J.P. Morgan, were unable to value the trusts, and refused to "bail out" Knickerbocker. (Unregulated and a relatively new innovation, trusts were the "toxic assets" of the 1907 crises.)

Their refusal prevented other institutions from offering aid, and depositors started a massive run on banks and trusts, exacerbating the liquidity crises. (In 2008 a loss of confidence in the banking system did not turn into a consumer run on banks primarily because of FDIC deposit insurance.)

Morgan et al realized that a failure of the trusts could spread to the entire financial system, and they ultimately convinced John D. Rockefeller and others to pony up enough cash to stabilize the markets.

Similarly, American lawmakers eventually agreed that failure of the nation's largest financial institutions was not an option, and passed the $700 billion Trouble Asset Relief Program in October 2008 (reduced to $475 billion by the Dodd-Frank Act). This program was designed "to strengthen market stability, improve the strength of financial institutions, and enhance market liquidity," according to the Federal Reserve.

A major difference between the two crises, that I can see, is the popular perception of these liquidity liberators. In 1907, Senator Nelson Aldrich called the actions of JP Morgan and crew heroic. In his arguments for centralized banking reprinted in the New York Tribune, he warned that without it "men may not be found in another emergency with the patriotism, courage and capacity of those who in this crisis rendered such inconspicuous and invaluable service to the financial interests of this country."

But in the 2008 crisis, when taxpayers rendered this very same "invaluable service," people stormed the streets in protest. From the tea party conservative to the Wall Street occupier, hatred of the bailouts was met with bipartisan vehemence.

So why is it that when a handful of wealthy individuals restore liquidity to a broken system they are courageous patriots, but when it's taxpayer's, lawmakers are voted out of office? Perhaps the vehemence comes from how the money was used. In 1907, it was to save consumer's retail deposits, in 2008 corporate wholesale funds.

As Bernanke explains in his speech, seeking to stem the panic in wholesale funding markets, in 2008 the Fed "extended its lender-of-last-resort facilities to support nonbank institutions such as investment banks." This had little direct impact on consumers. As Fed governor Daniel Tarullo recently said "the savings of most U.S. households are generally not directly at risk in short-term wholesale funding arrangements."

In 1907, on the other hand, ending bank runs meant "widows on the corner" could cash their checks, shop-owners could feed their families.

Another problem with the 2008 solution, from the popular perspective, was the moral hazard it created.

Senator Aldrich worried that courageous individuals might be hard to find in a financial emergency, and it appears he was right to worry. Senior executives in 2008 were not interested in rendering an inconspicuous service to the financial interests of the country. They didn't even want to forego their bonuses. But in trying to account for the rarity of courage, lawmakers in 1913 may have created a system that prevents it from emerging.

A July 2013 Congressional research report articulates a challenge for today's central bankers. "Although 'too big to fail' (TBTF) has been a perennial policy issue, it was highlighted by the near-collapse of several large financial firms in 2008...If a TBTF firm believes that the government will protect them from losses, they have less incentive to monitor the firm’s riskiness because they are shielded from the negative consequences of those risks."

In 1907, the wealthy elite pooled their resources to prevent the failure of banks and trusts, saving millions in consumer deposits. In so doing they bore the brunt of the consequences of their risks, and Americans considered them heroes for it.

Sunday, November 10, 2013

These days there's a lot going on in North Carolina politics. The Republican-dominated legislature has enacted a far-right agenda, "tearing down years of progress in public education, tax policy, racial equality in the courtroom and access to the ballot," wrote the New York Times in July 2013.

This is not the first time in North Carolina history that a regressive agenda has wiped out years of progressive reform.

In 1898, Wilmington was the largest city in North Carolina, with a population that was majority African-American. Black businessmen dominated the restaurant and barbershop trade, owned tailor shops and drug stores, and served as firemen, policemen, and civil servants. "A good feeling between the races existed as long as white Democrats controlled the state politically," according to PBS.org.

That started to changed in the early 1890s, when the Republican party formed a coalition with progressive Democrats and started to win on election day. Fusionists, as they were called, were committed to re-writing the state's election laws and increasing black participation in state and local politics. Fusionists elected Republican Daniel Lindsay Russell in 1896. (North Carolina wouldn't see another Republican governor until 1973.)

Overcoming widespread voter intimidation, in 1898 voters elected a biracial fusionist government to office in Wilmington. Though the mayor and two-thirds of the aldermen were white, calls of "negro domination" permeated the media. A violent mob, led by the former gubernatorial candidate Alfred Moore Wadell (who lost to Mr. Russell), swarmed the streets.

On November 10, Waddell and his mob indiscriminately killed dozens of unarmed black citizens, and forced the white Republican Mayor Silas P. Wright and other members of the city government (both black and white) to resign. They installed a new city council that elected Waddell to take over as mayor by 4 p.m. that day. Appeals to President William McKinley to intervene were ignored, letting stand the only successful coup d'etat in United States history.

Further north in Virginia, newspaperman and bank-owner John Mitchell Jr. -- aka "The Fighting Editor" -- was appalled by the the events in Wilmington. Born a slave in 1863, Mitchell was editor of the Richmond Planet for over 40 years, served on the Richmond City Council, and in 1902 founded the Merchant Savings Bank.

In an editorial in his paper after the Wilmington riots, Mitchell reminds us that not all perspectives deserve to be heard, but those standing for justice and peace must not be silent.The outrageous happenings at Wilmington, NC almost surpasses comprehension. Never in the history of this country have we seen or heard anything like it before. A mob takes possession of the city, and without due cause murders twenty-five inoffensive and unarmed colored people, drives hundreds to the woods to starve and die, forces the city officials to leave the city and then duly installs themselves in their place without the shadow of an excuse of the sanction of the law.

A.M. Wadell has by treasonable practices declared himself mayor and this too in the face of the laws of the state of North Carolina. Who made him mayor? From whom did he secure his authority? Was it from the hands of the white lawyers, the doctors, the merchants and preachers, who while inciting the mobs to deeds of murderous violence, under our laws particep criminals--became murderers themselves?This is the logical result of compromising with wrong. It is an object lesson to the thoughtful. All of the good white people are not dead, but in the neighborhood of Wilmington they are painfully silent.

It's comforting to know that in refusing to remain silent, today's Moral Mondaysprotesters have heeded the lessons of history. Like them on Facebook! https://www.facebook.com/MoralMondays :).

Sunday, November 3, 2013

Did you know this November is social justice month? "We live in a dangerous time," says the Revolutionary Poetry Brigade, the group that founded the event. The organizers hope to make November "an annual international event exposing the world’s injustices and pointing the way to a transformative future."

In the spirit of social justice month, let us remember the events of November 3, 1979, known today as the Greensboro Massacre. Five protesters from the Communist Workers Party were shot and killed by members of the Ku Klux Klan. Several of the KKK were charged with the murders, but then acquitted by an all white jury in 1981. Jurors agreed with the defense that the suspects shot in self-defense, according to a Frontline documentary aired in 1983.

The protest was the culmination of attempts by the Communist Workers Party to organize black industrial workers, and bring awareness to rising incidences of brown lung disease and other workplace injuries.

Several of the movement leaders were doctors who left their practices to fight for worker's rights in the textile mills. After failed attempts to dialogue with management, the Community Workers Party sought a new tactic, one that could unite black and white workers. To capitalize on growing animosity toward the Klan in Greensboro, they put out a poster announcing a "Death to the Klan" march on November 3.

"I think the Klan, historically, are cowards," said Nelson Johnson, the poster designer.

They're also cheap, according to former Klan-member turned FBI-informant Edward Dawson, who decided to help the FBI in retribution. Dawson was angry at the Klan for refusing to pay a fine he received in the course of performing Klan-related duties.

"We got five years, one year suspended for five and a $1,000 fine," Dawson told Frontline's James Reston. "And that's what helped irritate me something furious. They refused to pay the fine. We had to pay that out of our pocket."

As a double agent, Dawson made his own posters for the march, ones that had a vision of a lynching and read: "Notice to traitors, Communists, race mixers and Black rioters: Traitors beware! Even now the cross hairs are on the backs of your necks. It's time for old-time justice -- American justice."Despite the violent nature of these posters, and the information that Dawson provided to law enforcement that the Klan intended to bring guns to the march, local police were absent. Frontline reported that with the start of the march only a half an hour away, the two tactical squads assigned to the march were given permission to take their lunch break.

"I think that medicine and politics really start from the same place," Dr. Paul Bermazohn, who survived a bullet in his brain on November 3, told Frontline. "If you're concerned about people, it will lead you often into the fields like medicine. Brown lung is really not a disease caused by cotton dust. It's a disease caused by an economic system that puts a priority on profit over people."